2014 2015 Bar Examinations Insurance

I.
Carlo and Bianca met in the La Boracay festivities. Immediately, they fell in love with each other and got married
soon after. They have been cohabiting blissfully as husband and wife, but they did not have any offspring. As the
years passed by, Carlo decided to take out an insurance on Biancaslife for P1,000,000.00 with him (Carlo) as sole
beneficiary, given that he did not have a steady source of income and he always depended on Bianca both
emotionally and financially. During the term of the insurance, Bianca died of what appeared to bea mysterious
cause so that Carlo immediately requested for an autopsy tobe conducted. It was established that Bianca died of a
natural cause. More than that, it was also established that Bianca was a transgender all along a fact unknown to
Carlo. Can Carlo claim the insurance benefit? (5%)

VI.
On May 26, 2014, Jess insured with Jack Insurance (Jack) his 2014 Toyota Corolla sedan under a comprehensive
motor vehicle insurance policy for one year. On July 1, 2014, Jess car was unlawfully taken. Hence, he
immediately reported the theft to the Traffic Management Command (TMC) of the Philippine National Police (PNP),
which made Jess accomplish a complaint sheet as part of its procedure. In the complaint sheet, Jess alleged that a
certain Ric Silat(Silat) took possession of the subject vehicle to add accessories and improvements thereon.
However, Silat failed to return the subject vehicle within the agreed 3-day period. As a result, Jess notified Jack of
his claim for reimbursement of the value of the lost vehicle under the insurance policy. Jack refused to pay
claiming that there is no theft as Jess gave Silat lawful possession of the car. Is Jack correct? (4%)
VIII.
As a rule, an insurance contract is consensual and voluntary. The exception is in the case of: (1%)
(A) Inland Marine Insurance
(B) Industrial Life Insurance
(C) Motor Vehicle Liability Insurance
(D) Life Insurance
IX.
On February 21, 2013, Barrack entered into a contract of insurance with Matino Insurance Company (Matino)
involving a motor vehicle. The policy obligates Matino to pay Barrack the amount of Six Hundred Thousand Pesos
(P600,000.00) in case of loss or damage to said vehicle during the period covered, which is from February 26, 2013
to February 26, 2014.
On April 16, 2013, at about 9:00 a.m., Barrack instructed his driver, JJ, to bring the motor vehicle to a near by
auto shop for tune-up. However, JJno longer returned and despite diligent efforts to locate the said vehicle, the
efforts proved futile. Resultantly, Barrack promptly notified Matino of the said loss and demanded payment of the
insurance proceeds of P600,000.00.
In a letter dated July 5, 2013. Matino denied the claim, reasoning as stated in the contract that "the company shall
not be liable for any malicious damage caused by the insured, any member of his family or by a person in the
insureds service. Is Matino correct in denying the claim? (4%)
XIV.
On September 25, 2013, Danny Marcial (Danny) procured an insurance on his life with a face value of
P5,000,000.00 from RN Insurance Company (RN), with his wife Tina Marcial(Tina) as sole beneficiary. On the same
day, Danny issued an undated check to RN for the full amount of the premium. On October 1, 2013, RN issued the
policy covering Dannys life insurance. On October 5, 2013, Dannymet a tragic accident and died. Tina claimed the
insurance benefit, but RN was quick to deny the claim because at the time of Dannys death, the check was not yet
encashed and therefore the premium remained unpaid.
Is RN correct? Will your answer be the same if the check is dated October 15, 2013? (4%)
XV.

A, B, C, D, and Ewere members of the 2003-2004 Board of Directors of FLP Corporation. At the election for the
2004-2005 Board of Directors, not one of them was elected. They filed in court a derivative suit on behalf of FLP
Corporation against the newly-elected members of the Board of Directors. They questioned the validity of the
election as it was allegedly marred by lack of quorum, and prayed for the nullification of the said election. The
2004-2005 Board of Directorsmoved to dismiss the complaint because the derivative suit is not proper. Decide.
(4%)
XX.
On May 13, 1996, PAM, Inc. obtained a P15,000,000.00 fire insurance policy from Ilocano Insurance covering its
machineries and equipment effective for one (1) yearor until May 14, 1997. The policy expressly stated that the
insured properties were located at "Sanyo Precision Phils. Building, Phase III, Lots 4 and 6, Block 15, PEZA,
Rosario, Cavite." Before its expiration, the policy was renewed on "as is" basis for another year or until May 13,
1998. The subject properties were later transferred to Pace Factory also in PEZA. On October 12, 1997, during the
effectivity of the renewed policy, a fire broke out at the Pace Factory which totally burned the insured properties.
The policy forbade the removal of the insured properties unless sanctioned by Ilocano. Condition 9(c) of the policy
provides that "the insurance ceases to attach as regards the property affected unless the insured, before the
occurrence of any loss or damage, obtains the sanction of the company signified by endorsement upon the policy x
x x (c) if the property insured is removed to any building or place other than in that which is herein stated to be
insured." PAM claims that it has substantially complied with notifying Ilocano through its sister company, the
RBC, which, in fact, referred PAM to Ilocano for the insurance coverage. Is Ilocano liable under the policy? (4%)
XXI.
On July 3, 1993, Delia Sotero (Sotero) took out a life insurance policy from Ilocos Bankers Life Insurance
Corporation (Ilocos Life) designating Creencia Aban(Aban), her niece, as her beneficiary. Ilocos Life issued Policy
No. 747, with a face value of P100,000.00, in Soteros favor on August 30, 1993, after the requisite medical
examination and payment of the premium.
On April 10, 1996, Sotero died. Aban filed a claim for the insurance proceeds on July 9, 1996. Ilocos Life
conducted an investigation into the claim and came out withthe following findings:
1. Soterodid not personally apply for insurance coverage, as she was illiterate.
2. Soterowas sickly since 1990.
3. Soterodid not have the financial capability to pay the premium on the policy.
4. Soterodid not sign the application for insurance.
5. Aban was the one who filed the insurance application and designated herself as the beneficiary.
For the above reasons and claiming fraud, Ilocos Life denied Abans claim on April 16, 1997, but refunded the
premium paid on the policy. (6%)
(A) May Sotero validly designate her niece as beneficiary?
(B) May the incontestability period set in even in cases of fraud as alleged in this case?
(C) Is Aban entitled to claim the proceeds under the policy?

XXVII.
ELP Insurance, Inc. issued Marine Policy No. 888 in favor of FCL Corp. to insure the shipment of 132 bundles of
electric copper cathodes against all risks. Subsequently, the cargoes were shipped on board the vessel "M/V
Menchu" from Leyte to Pier 10, North Harbor, Manila.
Upon arrival, FCL Corp. engaged the services of CGM, Inc. for the release and withdrawal of the cargoes from the
pier and the subsequent delivery to its warehouses/plants in Valenzuela City. The goods were loaded on board
twelve (12) trucks owned by CGM, Inc., driven by its employed drivers and accompanied by its employed truck
helpers. Of the twelve (12) trucks en routeto Valenzuela City, only eleven (11) reached the destination. One (1)
truck, loaded with eleven (11) bundles of copper cathodes, failed to deliver its cargo.

Because of this incident, FCL Corp. filed with ELP Insurance, Inc. a claim for insurance indemnity in the amount
of P1,500,000.00. After the requisite investigation and adjustment, ELP Insurance, Inc. paid FCL Corp. the amount
of P1,350,000.00 as insurance indemnity.
ELP Insurance, Inc., thereafter, filed a complaint for damages against CGM, Inc. before the Regional Trial Court
(RTC), seeking reimbursement of the amount it had paid to FCL Corp. for the loss of the subject cargo. CGM, Inc.
denied the claim on the basis that it is not privy to the contract entered into by and between FCL Corp. and ELP
Insurance, Inc., and hence, it is not liable therefor. If you are the judge, how will you decide the case? (4%)

---oo0ooo--II.
A. Novette entered into a contract for the purchase of certain office
supplies. The goods were shipped. While in transit, the goods were insured
by Novette. Does she have an insurable interest over the goods even before
delivery of the same to her? Explain. (2%)
B. Will an insurance policy be binding even if the premium is
unpaid? What if it were partially paid? (3%)